International Trade Theory and Policy
by Steven M. Suranovic

Trade 10-1A

Selected US Tariffs - 2004

The table below contains a selection of the US tariff rates specified in the 2004 US Harmonized Tariff Schedule (HTS). The complete US HTS is available at the US International Trade Commision website HERE. The US Treasury department provides historical US tariff schedules dating back to 1997 HERE. To see a small sample of US tariff rates from 1996, Click HERE.

The tariff schedule below displays three columns. The first column shows the product classification number. The first two numbers refer to the chapter, the most general product specification. For example, 08 refers to chapter 8, "Edible fruit and nuts; peel of citrus fruit or melons." The product classification becomes more specific for each digit to the right. Thus 0805 refers more specifically to "Citrus fruit, fresh or dried." 0805 40 refers to "Grapefruit," and 0805 40 40 refers to "Grapefruit entering between August 1 and September 30." This classification system is harmonized among about 200 countries up to the first 6 digits and is overseen by the World Customs Organization.

The second column gives a brief description of the product. The third column displays the "General Rate of Duty" for that particular product. This is the tariff that the US applies to all countries with Most Favored Nation (MFN) status, or as it is now referred to in the US, "Normal Trade Relations" (NTR). The status was renamed NTR to provide a more accurate description of the term. One provision in our GATT/WTO agreements is that the US promises to provide every WTO member country with MFN status. As a matter of policy, the US also typically grants most non-WTO countries with the same status. For example, Russia is currently (Sept 2004) not a member of the WTO, but the US applies our NTR tariffs rates on imports from them.

The final column lists special rates of duty that apply to select countries under special circumstances. For each product you will see a tariff rate followed by a list of symbols in parentheses. The symbols indicate the trade act or free trade agreement that provides special tariff treatment to those countries. A complete list of these is shown below. Symbols that include a "+" or "*" generally refer to special exceptions that apply for some countries with that product. The non-MFN tariff rate is also listed in this column. The only countries now subject to the non-MFN tariffs are Cuba, Laos and North Korea. (Note, Cuba is a WTO member, thus the US does not always honor its WTO obligations) The last countries removed from the Non-MFN category were Serbia and Montenegro in December 2003. Ten years ago, other countries in the non-MFN category included Vietnam, Iran and Afghanistan. Finally, note that some countries, such as Cuba, have other provisions, such as trade embargoes, that further restrict access of their products.

 

Special Tariff Classifications in the US
A, A*, A+ Generalized System of Preferences (GSP) (More info: page 11)
B Automotive Products Trade Act (More info: page 21)
CA, MX North American FTA (NAFTA)
Canada and Mexico (More info: page 31)
D African Growth and Opportunity Act (More info: page 170)
E Carribean Basin Economic Recovery Act (More info: page 23)
IL US-Israel FTA (More info: page 26)
J, J*, J+ Andean Trade Preference Act (More info: page 29)
R US-Carribean Trade Partnership Act (More info: page 171)
JO US-Jordan FTA (More info: page 172)
SG US-Singapore FTA (More info: page 176)
CL US-Chile FTA (More info: page 267)

The products presented below were selected to demonstrate several noteworthy features of US trade policy. The WTO reports in the 2006 US Trade Policy Review that most goods enter the US either duty free or with very low tariffs. Coffee and FAX machines are two goods, shown below, representative of the many goods that enter duty free. The average MFN tariff in the US in 2002 was about 5% although for agricultural goods the rate was almost twice as high. About 7% of US tariffs exceed 15%, these mostly on sensitive products such as peanuts, dairy, footwear, textiles and clothing. The trade-weighted average tariff in the US was only about 1.5% in 2003.

One interesting feature of the tariff schedule is the degree of specificity of the products in the HTS schedule. Besides product type, categories are divided according to weight, size or the time of year. Note especially the description of ceramic tableware and bicycles.

Tariffs vary according to time of entry, as with cauliflower, grapefruit and grapes. This reflects the harvest season for those product in the US. When the tariff is low, that product is out of season in the US. Higher tariffs are in place when US output in the product rises.

Notice the tariffs on cauliflower and broccoli. They are lower if the vegetables are unprocessed. If the product is cut or sliced before arriving in the US, the tariff rises to 14%. This reflects a case of tariff escalation. Tariff escalation means charging a higher tariff the greater the degree of processing for a product. This is a common practice among many developed countries and serves to protect domestic processing industries. Developing countries complain that these practices impede their development by preventing them from competing in more advanced industries. Consequently, tariff escalation is a common topic of discussion during trade liberalization talks.

Tariffs rates also vary with different components of the same product, as with watches. Note also that watches have both specific tariffs and ad valorem tariffs applied.

Notice that tariffs on cars in the US is 2.5%, but the tariff on truck imports is 10 times that rate at 25%. The truck tariff dates back to 1963 and is sometimes referred to as the "chicken tax." It was implemented, primarily to affect Volkswagon, in retaliation for West Germany's high tariff on chicken imports from the US. Today, Canada and Mexico are exempt from the tariff due to NAFTA and Australia will also be exempt with the new US-Australia FTA. The truck tax is set to be a contentious issue in current US-Thailand FTA discussions.

The tariff rates themselves are typically set to several significant digits. One has to wonder why the US charges 4.4% on golf clubs rather than an even 4 or 5%. Much worse is the tariff rate on cane sugar with six significant digits.

The special tariff rates are often labeled "Free," meaning these goods enter duty-free from that group of countries. Note that Chile and Singapore sometimes have tariff rates in between the MFN rate and zero. This reflects the phase in process of the free trade area. Most FTAs include a 5-15 year phase-in period during which time tariffs are reduced annually towards zero.

 

  Selected Tariffs in the US 2004
HTS Code Description MFN/NTR Tariff Special Tariff

0704.10.20


0704.10.40

 

0704.10.60

Cauliflower, Broccoli 2.5% (June 5-Oct 25)

10% (Other, not reduced in size)


14% (Cut or sliced)

Free (A,CA,CL,E, IL,J,JO,MX,SG)

Free (A,CA,CL,E, IL,J,JO,MX)
7.5% (SG)

Free (A,CA,CL,E, IL,J,JO,MX)
12.2% (SG)

Non-MFN: 50%

0805.40.40

 

0805.40.60

 

0805.40.80

Grapefruit

1.9¢/kg (Aug-Sep)


1.5¢/kg (Oct)

 

2.5¢/kg (Nov-Jul)

Free (CA,D,E,IL, J,JO,MX,SG)
1.6¢/kg (CL)

Free (CA,D,E,IL, J,JO,MX,SG)
1.1¢/kg (CL)

Free (CA,D,E,IL, J,JO,MX)
2.2¢/kg (CL,SG)

Non-MFN: 3.3¢/kg

0806.10.20

0806.10.40

0806.10.60

Grapes, fresh $1.13/m3 (Feb 15-Mar 31)

Free (Apr 1-Jun 30)

$1.80/m3 (any other time)

Free (A+,CA,CL,D,E, IL,J,JO,MX,SG)

Non-MFN: $8.83/m3

6912.00.45 Ceramic tableware; plates not over 22.9 cm in maximum diameter and valued over $6 per dozen; plates over 22.9 but not over 27.9 cm in maximum diameter and valued over $8.50 per dozen 4.5%

Free (A+,CA,CL,D,E, J,JO,MX,SG)

 

Non-MFN: 55%

7116.10.25 Cultured Pearls 5.5%

Free (A,CA,CL,L,J, JO,MX)

4.1% (SG)

Non-MFN: 110%

8703.2x.00 Motor cars principally designed for the transport of persons, of all cylinder capacities 2.5%

Free (A+,B,CA,CL,D, E,IL,J,JO,MX,SG)

Non-MFN: 10%

8704.22.50 Motor vehicles for the transport of goods (i.e., trucks), gross vehicle weight exceeding 5 metric tons but less than 20 metric tons 25%

Free (A+,B,CA,CL,D, E,IL,J,MX)

15% (JO)

22.5% (SG)

Non-MFN: 25%

8712.00.15 Bicycles having both wheels not exceeding 63.5 cm in diameter 11%

Free (A+,CA,CL,D,E, IL,J,MX)

2.2% (JO)

9.6% (SG)

Non-MFN: 30%

1701.11.05 Cane sugar: 1.4606¢/kg less .020668¢/kg for each degree under 100 degrees but not less than .943854¢/kg

Free (A*,CA,CL,E*,IL, J,JO,MX,SG)

Non-MFN: 4.3817¢/kg less .0622005¢/kg for each degree under 100 degrees but not less than 2.831562¢/kg

6404.11.20 Sports footwear; tennis shoes, basket-ball shoes, gym shoes, training shoes and the like: having uppers of which over 50% of the external surface area is leather 10.5%

Free (CA,CL,D,IL,J+, MX,R)

2.1% (JO)

9.1% (SG)

Non-MFN: 35%

9506.31.00 Golf clubs 4.4%

Free (A,CA,CL,E,IL, J,JO,MX,SG)

Non-MFN: 30%

9101.11.40 Wristwatches 51 each + 6.25% on case and strap + 5.3% on battery

38.2 each + 4.6% on case and strap + 3.9% on battery (CL,SG)

Free (CA,D,E,IL,J, J+,JO,MX,R

8517.21.00 Fax machines Free Non-MFN: 35%
0901.21.00 Coffee, non-decaffeinated Free Non-MFN: Free
0902.10.10 Tea, green tea, flavored 6.4%

Free (A,CA,CL,E,IL, J,JO,MX)

4.8% (SG)

Non-MFN: 20%

One thing to think about while reviewing this tariff schedule is the administrative cost of monitoring and taxing imported goods. Not only does the customs service incur costs to properly categorize and measure goods entering the country, but foreign firms themselves must be attuned to the intricacies of the tariff schedule of all of the countries to which it exports. All of this requires the attention and time of employees of the firms and represents a cost of doing business. These administrative costs are rarely included in the evaluation of trade policies.

An administratively cheaper alternative would be to charge a fixed ad valorem tariff on all goods that enter, much like a local sales tax. However, it would be almost impossible for political reasons to switch to this much simpler alternative.

 

International Trade Theory and Policy - Chapter 10-1A04: Last Updated on 2/13/07

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